The dollar was decidedly better bid on the first trading day of the week as the markets awaited key testimony from Fed Chair Janet Yellen and reacted to the latest developments on the EU – Greek bailout deal.

The euro weakened throughout the morning European trade in reaction to Friday’s announced deal between EU and Greece. Although the parties appear to have come to an agreement, the broad terms of the deal suggested that it was only a four month extension with many key details still to follow.

After Friday’s relief rally the pair drifted lower most of the night giving much of it gains. The pair was also hurt by the lackluster results from the IFO survey. Although IFO managed to just barely beat last month’s reading coming in at 106.8 vs. 106.7, it missed the expectations which were looking for a much stronger improvement in sentiment to 107.4.

According to IFO domestic demand in Germany has weakened slightly resulting in lower than expected jump in the readings. The IFO authorities did note however that current situation results were above average and that the economy continued to benefit from lower oil prices and lower exchange rates. Still the institute cautioned that it would be hard for Germany to surpass the strong growth seen in Q4 of 2014.

With most of the Greek drama now behind us, the markets are turning their attention to this side of the Atlantic as Janet Yellen takes a seat in front of Congress for her semi annual Humphrey Hawkins testimony tomorrow. The key focus will be on the Fed’s timeline for normalization as the Fed balances the risks of US growth with the tepid performance in the rest of the G-7 universe and the general lack of any headline inflation.

With little on the US calendar save for Existing Home Sales data the North American session may look to extend dollar rally in the preamble to Ms. Yellen’s testimony tomorrow. It remains to be seen just how hawkish she will be, but for now the market is clearly leaning towards the buck.